indiamarketoutlook

Kya Nifty mein Bada Correction aayega.. Ya Naya High Marega..???

Long
NSE:NIFTY   Nifty 50 Index
Nifty
CMP 11020


Here I am..
This is me...
There's no where else on earth I'd rather be...


It feels good to be back and back in action with analysis after a break for a few days due to personal health issues.
I take this opportunity to Thank you all for the well wishes and speedy recovery... :-)

Coming back to our main topic.... Kya lagta hai... Nifty mein Bada Correction aayega...???

Back in March, if you would have asked me, I too was of the opinion that we might see rally from 7800 to 10400 odd levels and from there on we might see a bigger correction. In case you missed it, here is the link for the same, published on 19th March, 2020



However by trading above 10551 for a month now, as I see it, the structure seems to have changed... The new structures seems to suggest that Nifty might be heading towards 14200 odd levels in possibly next 6 months.

Wait a minute,

- Business seems to be at a stand still and things could worsen further....

- the valuations are pretty pretty high...(PE ratio is at 30)

- the markets have already rallied quite a bit...

- the markets have tested it's 76.4% Fib retracement...

Yes I agree to all those points. But remember markets were falling when the number of COVID cases were in 100s and now the markets have been rising when the COVID cases are 10 lakh + in India alone

I am not saying this is what will surely happen. No one can say, with a guarantee. & although it may sound ridiculous & irrational at this point, I would say, how I look at the current setup I am open to the idea of market rally towards a new high & it is a scenario which has developed given the change in structure...which needs to be respected.

Take a look at this Sensex chart with focus on 2006-2009 time frame...


The chart is self-explanatory. Just look at the numbers.

- The levels are very much similar Sensex 12630 as against 12430 Nifty
- Magnitude of correction 32% in Sensex as against 38% in Nifty ( Both are 30% + correction)
- The time frame of the correction is also very much similar ( 3 month)

So for me to see a bigger correction now, I would be looking for a crazy euphoric up side movement first. Till then I might be looking to buy on dips.

For this structure to get invalidated, Nifty would have to close below 9800.

Again this is not based on my wishful thinking... But based on historical price movement behavior...

Let me put it straight across that this is just my view and in no way a sure shot claim. We are just looking at it as probabilities and possibilities.

Do take proper risk management measures. And read the Disclaimer


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Analyzing my strategies for July series...

- I did take a hit in Reliance strategy (a big thanks to my well wishers who warned me that I am taking "panga" with Mota bhai & that I shouldn't do so. I did cut down my position a little bit but took the hit none the less)

- Hindalco strategy although troubled initially but eventually gave decent profits. (A case of making money even after things not panning out the way you expected it...)

- apart from that, other strategies in JSW Steel, Glenmark , SBI , RBL Bank, Bank Nifty , Bajaj FInance, LIC Housing Finance and a few others worked well & did yield the desired results.
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Take care & best wishes...!!!

Discliamer:
- The view expressed here is my personal view
- Use this for educational purpose
- Any decision you take you need to take responsibility for the same
- It's your hard earned money. Treat it wisely
- Trade / Invest keeping in mind your trading style, goals and objectives, time horizon & risk tolerance
- F&O trading involves risk
- Do take proper risk management measures
- Do your own analysis and consult your financial adviser if need be

Comments

Nice comparison with Sensex values of 2006-2009. But, try to compare time taken also, you might notice the difference.
Reply
indiamarketoutlook Swarnendu_Mitra
@Swarnendu_Mitra, Nifty chart is a daily chart whereas Sensex chart is weekly chart. So if you are looking at number of candles for reference you would feel there is a difference. Look at the moths below in the chart axis and then try to compare the time frame....
Reply
Swarnendu_Mitra indiamarketoutlook
@indiamarketoutlook, already done.. Try with Sensex daily close data of 2006 and NIFTY every 2 day close data of 2020 and compare. Both running in same direction so far, only NIFTY will take twice the time to reach the Sensex targets.
Reply
your direction is right but values are wrong. there is vast difference in nifty & sensex. ratio 3.5:1. on that basis nifty can go up to 12100.
Reply
@ckirtane, Sensex chart is for a period of 2006-2009...
Reply
When everyone knows markets do opposite. Now around 60-70% of people are bullish and think market will go up. so, time to be careful.
Reply
thumbs down for 14k... may be market can extend this rally to 11600 and may be 120000.. previous highs will not be taken out.. we will see a correction where 9500 is taken out . below that.. we need to wait and see
Reply
@Parasuram, Market valuation wise is at absolutely ridiculous levels.... and in no way should be trading at such high valuations. But this is just a scenario which caught my attention and reminded me of that time frame in 2006-2007 and hence updated the same here...
Reply
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